Editing Virtual economy

{{short description|Emergent economy existing in a virtual world}}
{{redirect-distinguish|Virtual realty|virtual reality|virtual tour}}
{{Redirect|Real world trading||gold farming|and|trade}}
{{Lead too short|date=February 2022}}
{{Economic systems sidebar}}
A '''virtual economy''' (or sometimes '''synthetic economy''') is an [[emergence|emergent]] economy existing in a [[virtual world]], usually exchanging [[virtual goods]] in the context of an [[online game]], particularly in [[massively multiplayer online game]]s (MMOs). People enter these virtual economies for recreation and entertainment rather than necessity, which means that virtual economies lack the aspects of a real economy that are not considered to be "fun" (for instance, avatars in a virtual economy often do not need to buy food in order to survive, and usually do not have any biological needs at all). However, some people do interact with virtual economies for "real" economic benefit.

Despite primarily dealing with in-game currencies, this term also encompasses the selling of virtual currency for real money, in what is sometimes called "open centralised marketplaces".<ref name="auto">{{Cite web|title=The Virtual Economy|url=https://atelier.net/virtual-economy/|website=L'Atelier}}</ref>

== Overview ==
Virtual economies are observed in [[Multi-user dungeon|MUD]]s and [[massively multiplayer online role-playing games]] (MMORPGs). The largest virtual economies are found in MMORPGs. Virtual economies also exist in life simulation games which may have taken the most radical steps toward linking a virtual economy with the real world. This can be seen, for example, in [[Second Life]]'s recognition of intellectual property rights for assets created "in-world" by subscribers, and its ''[[laissez-faire]]'' policy on the buying and selling of Linden Dollars (the world's official currency) for real money on third party websites.{{Citation needed|date=August 2010}} Virtual economies can also exist in browser-based Internet games where "real" money can be spent and user-created shops opened, or as a kind of [[emergent gameplay]].

Virtual property is a label that can refer to any resource that is controlled by the powers-that-be, including virtual objects, [[Avatar (computing)|avatars]], or user accounts.<ref>{{cite journal |ssrn=1469299 |title=The Virtual Property Problem: What Property Rights in Virtual Resources Might Look Like, How They Might Work, and Why They are a Bad Idea |first=John |last=Nelson |year=2010 |journal=McGeorge Law Review |volume=41 |pages=281, 285–86 |doi=10.2139/ssrn.1805853|s2cid=167999791 |url=https://scholarlycommons.pacific.edu/cgi/viewcontent.cgi?article=1235&context=mlr }} {{cite journal |url=http://www.bu.edu/law/central/jd/organizations/journals/bulr/volume85n4/Fairfield.pdf |title=Virtual Property |access-date=2010-08-30 |first=Joshua |last=Fairfield |year=2005 |journal=Boston University Law Review |volume=85 |page=1047 |archive-url=https://web.archive.org/web/20110812211944/http://www.bu.edu/law/central/jd/organizations/journals/bulr/volume85n4/Fairfield.pdf |archive-date=2011-08-12 |url-status=dead }}</ref> The following characteristics may be found in virtual resources in mimicry of tangible property.  Note however that it is possible for virtual resources to lack one or more of these characteristics, and they should be interpreted with reasonable flexibility.<ref>{{cite journal |url=http://www.bu.edu/law/central/jd/organizations/journals/bulr/volume85n4/Fairfield.pdf |title=Virtual Property |access-date=2010-08-30 |first=Joshua |last=Fairfield |year=2005 |journal=Boston University Law Review |volume=85 |page=1047 |archive-url=https://web.archive.org/web/20110812211944/http://www.bu.edu/law/central/jd/organizations/journals/bulr/volume85n4/Fairfield.pdf |archive-date=2011-08-12 |url-status=dead }} {{cite journal |ssrn=962905 |title=The Five Indicia of Virtual Property |first=Charles |last=Blazer |year=2006 |journal=Pierce Law Review |volume=5 |page=137}}</ref>
# '''Rivalry''': Possession of a resource is limited to one person or a small number of persons within the virtual world's game mechanics.
# '''Persistence''': Virtual resources persist across user sessions.  In some cases, the resource exists for public view even when its owner is not logged into the virtual world.
# '''Interconnectivity''': Resources may affect or be affected by other people and other objects. The value of a resource varies according to a person's ability to use it for creating or experiencing some effect.
# '''Secondary markets''': Virtual resources may be created, traded, bought, and sold. Real-world assets (typically money) may be at stake.
# '''Value added by users''': Users may enhance the value of virtual resources by customizing and improving upon the resource.

The existence of these conditions create an economic system with properties similar to those seen in contemporary [[economy|economies]]. Therefore, economic theory can often be used to study these virtual worlds.

Within the virtual worlds they inhabit, synthetic economies allow in-game items to be priced according to [[supply and demand]] rather than by the developer's estimate of the item's utility. These emergent economies are considered by most players to be an asset of the game, giving an extra dimension of reality to play. In classical synthetic economies, these goods were charged only for in-game currencies. These currencies are often sold for real world profit.

=== Marketplace ===
The release of [[Blizzard Entertainment]]'s [[World of Warcraft]] in 2004 and its subsequent huge success across the globe has forced both MMORPGs and their secondary markets into mainstream consciousness, and many new market places have opened up during this time. A search for WoW Gold on Google will show a multitude of sites (more than 90 sponsored results {{as of|2006|6|lc=on}}) from which Gold can be purchased. Real money commerce in a virtual market has grown to become a multibillion-dollar industry. In 2001, [[EverQuest]] players Brock Pierce and Alan Debonneville founded ''Internet Gaming Entertainment Ltd ([[IGE]])'', a company that offered not only the virtual commodities in exchange for real money but also provided professional customer service.  ''IGE'' had a trained staff that would handle financial issues, customer inquiries and technical support to ensure that gamers are satisfied with each real money purchase. It also took advantage of the global reach of synthetic worlds by setting up a shop in Hong Kong where a small army of technically savvy but low wage workers could field orders, load up avatars, retrieve store goods and deliver them wherever necessary.<ref name="CNN">{{cite web|url=http://edition.cnn.com/2004/TECH/10/21/spark.virtual.economy/index.html|title=CNN.com - Material gains from virtual world - Oct 25, 2004|access-date=2004-10-25|publisher=CNN|year=2004|archive-date=2022-02-19|archive-url=https://web.archive.org/web/20220219111050/http://edition.cnn.com/2004/TECH/10/21/spark.virtual.economy/index.html|url-status=live}}</ref><ref>{{cite book | first = Edward | last = Castronova | title = Synthetic Worlds: The Business and Culture of Online Games | location = Chicago | publisher = The University of Chicago Press | year = 2005 | page = [https://archive.org/details/syntheticworlds00edwa/page/164 164] | isbn = 978-0-226-09626-1 | url = https://archive.org/details/syntheticworlds00edwa/page/164 }}</ref> This lucrative market has opened a whole new type of economy where the border between the real and the virtual is obscure.<ref name="New York Times">{{cite web |url=https://www.nytimes.com/2005/05/29/business/yourmoney/29game.html?_r=0|title=The Game Is Virtual. The Profit Is Real. - New York Times|access-date=2005-05-29|work=New York Times|year=2005}}</ref>

Hundreds of companies are enormously successful in this newfound market, with some virtual items being sold for several million dollars, like [[Mike Winkelmann|Beeple]]'s ''[[Everydays: the First 5000 Days|Everyday]]''.<ref>{{Cite web|last=Kastrenakes|first=Jacob|date=2021-03-11|title=Beeple sold an NFT for $69 million|url=https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million|access-date=2021-10-26|website=The Verge|language=en|archive-date=2021-03-21|archive-url=https://web.archive.org/web/20210321215043/https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million|url-status=live}}</ref>  Some of these companies sell multiple virtual goods for multiple games, and others sell services for single games. Virtual real estate is earning real world money, with people like 43-year-old ''[[Wonder Bread]]'' deliveryman, John Dugger, purchasing a virtual real estate for $750, setting him back more than a weeks wages.<ref>{{cite magazine | url = https://www.wired.com/wired/archive/11.01/gaming.html | title = The Unreal Estate Boom | first = Julian | last = Dibbell | magazine = [[Wired (magazine)|Wired]] | volume = 11 | issue = 1 | date = January 2003 | access-date = 2017-03-12 | archive-date = 2013-07-02 | archive-url = https://web.archive.org/web/20130702125338/http://www.wired.com/wired/archive/11.01/gaming.html | url-status = live }}</ref> This virtual property includes nine rooms, three stories, rooftop patio, wall of solid stonework in a prime location, nestled at the foot of a quiet coastal hillside. Dugger represents a group of gamers that are not in the market for a real house but instead to own a small piece of the vast computer database that was [[Ultima Online]], the mythical world in which the venerable [[Massively multiplayer online game|MMO]] Ultima Online unfolds. Such trading of real money for virtual goods simply represents the development of virtual economies where people come together where the real and the synthetic worlds are meeting within an economic sphere.<ref>{{cite news | last = Musgrove | first = Mike | title = Virtual Games Create a Real World Market | newspaper = [[The Washington Post]] | date = 17 September 2005 | url = https://www.washingtonpost.com/wp-dyn/content/article/2005/09/16/AR2005091602083.html | access-date = 17 September 2017 | archive-date = 27 September 2017 | archive-url = https://web.archive.org/web/20170927011335/http://www.washingtonpost.com/wp-dyn/content/article/2005/09/16/AR2005091602083.html | url-status = live }}</ref>

Although virtual markets may represent a growth area, it is unclear to what extent they can scale to supporting large numbers of businesses, due to the inherent substitutability of goods on these markets plus the lack of factors such as location to dispense demand.  In spite of numerous famed examples of the economic growth of [[Second Life]], an amateur analyst in 2008 estimated the income inequity in Second Life's economy as worse than has ever been recorded in any real economy: a [[Gini coefficient]] of 90.2, a [[Hoover index]] of 77.8, and a [[Theil index]] of 91%.{{Citation needed|date=November 2009}} However, the application of these economic measures to a virtual world may be inappropriate where poverty is merely virtual and there is a [[direct relationship]] between in-game wealth and time spent playing.

The global secondary market - defined as real money trading between players - turnover was estimated at 880 million dollars in 2005 by the president of the, at the time, market leading company IGE.<ref>{{cite magazine | url = https://www.wired.com/gaming/virtualworlds/magazine/16-12/ff_ige | title = The Decline and Fall of an Ultra Rich Online Gaming Empire | first = Julian | last = Dibbell | magazine = [[Wired (magazine)|Wired]] | volume = 16 | issue = 12 | date = November 2008 | access-date = 2017-03-12 | archive-date = 2012-09-19 | archive-url = https://archive.today/20120919072823/http://www.wired.com/gaming/virtualworlds/magazine/16-12/ff_ige | url-status = live }}</ref> Before that, in 2004, the American economist Edward Castronova had estimated the turnover at over 100 million dollars based solely on sales figures from the two auction sites eBay and the Korean itemBay.<ref>{{cite news | first = Celeste | last = Biever | title = Sales in virtual goods top $100 million | work = [[New Scientist]] | date = 29 October 2004 | url = https://www.newscientist.com/article/dn6601 | access-date = 17 September 2017 | archive-date = 20 June 2015 | archive-url = https://web.archive.org/web/20150620182429/http://www.newscientist.com/article/dn6601 | url-status = live }}</ref> A speculative extrapolation based on these quotes and other industry figures produced a global turnover figure of 2 billion dollars as of 2007.<ref>{{cite web |url= http://virtual-economy.org/2007/03/02/how_big_is_the_rmt_market_anyw/ |archive-url= https://web.archive.org/web/20120103214826/http://virtual-economy.org/2007/03/02/how_big_is_the_rmt_market_anyw/ |url-status= dead |archive-date= 3 January 2012 |work= Virtual Economy |title= How big is the RMT market anyway? |date= 2 March 2007 }}</ref>

However, the secondary market is unlikely to have followed the growth of the primary market since 2007 seeing as game companies have become better at monetizing on their games with microtransactions and many popular games such as World of Warcraft are sporting increased measures against player to player real money trading. Also hampering the turnover growth are the extreme price drops that has followed the increased competition from businesses in mainland China targeting the global secondary market. Furthermore, the global decline in consumption that followed the [[financial crisis of 2007–2008]] would have affected the secondary market negatively as well. Post 2007 secondary market growth is likely localized to [[emerging markets]] such as Russia, eastern Europe, South America, and South East Asia - all of which are relatively inaccessible to international merchants due to payment systems, advertisement channels and language barrier. For example, South Korea is estimated to have the biggest share of the global real money trading market and it has there become an officially acknowledged and taxable part of the economy.<ref>{{cite news | first = Kim | last = Eun-jung | title = Gamers make real money on virtual items, court says OK | work = [[Yonhap]] | date = 14 January 2010 | url = http://english.yonhapnews.co.kr/Features/2010/01/13/48/0801000000AEN20100113009600315F.HTML | access-date = 13 February 2013 | archive-date = 5 April 2013 | archive-url = https://web.archive.org/web/20130405030629/http://english.yonhapnews.co.kr/Features/2010/01/13/48/0801000000AEN20100113009600315F.HTML | url-status = live }}</ref> In western countries the secondary market remains a black market with little to no social acceptance or official acknowledgement.

As for an actual economic model, secondary market turnover in popular player vs player oriented MMORPGs without trade restrictions such as [[RuneScape|Runescape]], [[Eve Online|EVE Online]] and [[Ultima Online]] has been estimated at around 1.1 dollar per concurrent player and day.<ref>{{cite web |url = http://www.avatarwithin.com/mmorpg/estimation-of-mmorg-secondary-market-size/ |work = Avatar Within |title = Estimation of MMORPG secondary market size |date = 13 January 2013 |access-date = 13 February 2013 |archive-date = 8 February 2014 |archive-url = https://web.archive.org/web/20140208031309/http://www.avatarwithin.com/mmorpg/estimation-of-mmorg-secondary-market-size/ |url-status = live }}</ref> No model for more regulated MMORPGs such as World of Warcraft has been suggested. However, being a largely unregulated market and tax free market, any turnover figure or economic model remain speculative.

== Types of virtual currencies ==
=== Standard currency ===
Many games, both online and off, use a common or standard type of currency that can only be earned in-game and used to spend on in-game items that cannot be traded with other players or converted to real-world funds by means provided by the developer; for example, by completing quests in ''World of Warcraft'', players earn gold pieces that are used to purchase new gear.

=== Premium currency ===
Many online games, particularly those that use the [[freemium]] model, offer at least one additional form of currency beyond its standard one, called premium currency. Premium currency cannot typically be earned in-game like common currency but instead by purchasing the premium currency using real-world funds. Premium currency typically is limited to purchase time-limited virtual goods, access to new characters or levels, large quantities of standard in-game currency, temporary boosts to the player-character's experience growth, or other goods that cannot be acquired with the common in-game currency. Once premium currency is purchased, it is rare for players to be able to revert the premium currency, or the goods purchased with it, back into real-world funds without selling it to other players through 3rd-party websites, making it a "one-way currency".<ref>{{cite web | url = https://www.gamesindustry.biz/articles/2019-10-18-big-spending-whales-arent-the-problem-with-free-to-play-games-opinion | title = Big spending whales aren't the problem with free-to-play games | first = Rob | last = Fahey | date = October 18, 2019 | access-date = February 14, 2020 | work = [[GamesIndustry.biz]] | archive-date = December 8, 2019 | archive-url = https://web.archive.org/web/20191208201011/https://www.gamesindustry.biz/articles/2019-10-18-big-spending-whales-arent-the-problem-with-free-to-play-games-opinion | url-status = live }}</ref> Most commonly, premium currency must be purchased through [[microtransaction]]s in bundles of fixed sizes with discounts for larger purchases, and do not allow players to purchase exactly the amount of premium currency they need for a virtual good. This practice tends to encourage the player to buy additional bundles as to minimize their leftover premium currency, a favorable practice for the publisher.<ref>{{cite journal | title = Economic model of microtransactions in video games | first = Nenad Zoran | last = Tomić | date = January 2019 | volume = 1 | issue = 1 | journal = Journal of Economic Science Research | doi = 10.30564/jesr.v1i1.439 | s2cid = 201924754 | url = https://ojs.bilpublishing.com/index.php/jesr/article/view/439 | doi-access = free | access-date = 2020-04-02 | archive-date = 2020-05-08 | archive-url = https://web.archive.org/web/20200508062756/https://ojs.bilpublishing.com/index.php/jesr/article/view/439 | url-status = live }}</ref>

=== In-game membership items ===
Some membership-based MMORPGs take advantage of the population of players who wish to buy in-game items with real money through in-game items that can only be generated by buying them from the developer, which can then be redeemed for membership status or traded with other players for items such as in-game currency. This also allows for games to maintain larger audiences of high-level players as they have the resources to buy membership with in-game gold from people who purchase and trade these items for gold. This also allows for an official conversion rate of in-game currency to real world currency to be established, though many 3rd-party item sellers will work to obtain the in-game currency needed to buy the membership items and sell them on 3rd-party markets at a lower real-world price than the official conversion rate. Many games who implement this monetization model often strictly prohibit 3rd-party real world trading and ban players who do so. Some examples of this form of monetization include Runescape's bonds<ref>{{Cite web|last=Jagex|title=RuneScape Bonds - Purchase, Trade, Consume.|url=https://www.runescape.com/bonds|access-date=2021-04-19|website=RuneScape|language=en|archive-date=2021-04-21|archive-url=https://web.archive.org/web/20210421202830/https://www.runescape.com/bonds|url-status=live}}</ref> and World of Warcraft's WoW Tokens.<ref>{{Cite web|title=Introducing the WoW Token - WoW|url=https://worldofwarcraft.com/en-us/news/18141101/introducing-the-wow-token|access-date=2021-04-19|website=World of Warcraft|language=en-US|archive-date=2021-04-19|archive-url=https://web.archive.org/web/20210419161937/https://worldofwarcraft.com/en-us/news/18141101/introducing-the-wow-token|url-status=live}}</ref>

=== Cosmetic items ===
Many online multiplayer games have player-run economies of cosmetic items, sometimes involving and encouraging the use of real-world money. ''[[Team Fortress 2]]'', a team-based online FPS released by [[Valve Corporation|Valve]] in 2007, is a [[hero shooter]], where players selected from one of several created characters to control. In 2009, Valve introduced hats, [[virtual goods]] that could be used to customize the character models. Hats could be earned by players by accumulating in-game material drops and then used to synthesize the hat, or later could be purchased directly using real-world currency through the game's storefront. Valve also expanded this customization beyond hats to include weapons, weapon "skins" which change the appearance of the weapon, and similar means to customize the selected character avatar. In addition, through Valve's digital storefront [[Steam (service)|Steam]], players could trade these items, sell them in exchange for monetary credits which could only be used on Steam (from which Valve would take a cut of the sale), or receive them in promotions with other publishers of products they owned. This created a virtual economy around the game, as certain customization items carried status and recognition, giving them a perceived social value status.<ref>{{cite journal | title = Hats of Affect: A Study of Affect, Achievements and Hats in Team Fortress 2 | first = Christopher | last = Moore | date = February 2011 | journal = [[Game Studies]] | volume = 11 | issue = 1 | url = http://dro.deakin.edu.au/eserv/DU:30041568/moore-hatsof-2011.pdf | access-date = February 14, 2020 | archive-date = November 8, 2020 | archive-url = https://web.archive.org/web/20201108092247/http://dro.deakin.edu.au/eserv/DU:30041568/moore-hatsof-2011.pdf | url-status = live }}</ref> This created a virtual economy around items in the game, as some rare items, known as "unusuals" by the game community due to various special effects applied, and are seen as having high social value, had traded for as high as {{USD|1000}},<ref>{{cite web | url = https://www.destructoid.com/a-beginner-s-guide-to-the-team-fortress-2-economy-230418.phtml | title = A beginner's guide to the Team Fortress 2 economy | first = Patrick | last = Hancock | date = July 1, 2012 | access-date = February 14, 2020 | work = [[Destructoid]] | archive-date = June 15, 2019 | archive-url = https://web.archive.org/web/20190615122533/https://www.destructoid.com/a-beginner-s-guide-to-the-team-fortress-2-economy-230418.phtml | url-status = live }}</ref> and because of the active trading that incorporated real-world money, Valve hired economist [[Yanis Varoufakis]] to help manage this.<ref>{{cite web | url = https://www.destructoid.com/valve-went-ahead-and-hired-an-economist-229597.phtml | title = Valve went ahead and hired an economist | first = Jordan | last = Devore | date = June 15, 2012 | access-date = February 14, 2020 | work = [[Destructoid]] | archive-date = November 8, 2020 | archive-url = https://web.archive.org/web/20201108104730/https://www.destructoid.com/valve-went-ahead-and-hired-an-economist-229597.phtml | url-status = live }}</ref>

Valve followed the same pattern with its next major game, ''[[Counter-Strike: Global Offensive]]'', where players could earn crates in-game that could be unlocked with keys purchased through real-world funds to obtain weapon skins that were doled out based on a rarity scale, a practice they had started in ''Team Fortress 2''. As with ''Team Fortress 2'' skins, these ''Counter-Strike'' skins gained value as status symbols among players coupled with the rarity of certain skins, and became highly valued, and was considered to help boost the popularity of the game.<ref>{{cite magazine|url=http://www.pcgamer.com/how-400-virtual-knives-saved-counter-strike/|title=How $400 virtual knives saved Counter-Strike|magazine=[[PC Gamer]]|publisher=[[Future plc]]|first=Evan|last=Lahti|date=September 17, 2015|access-date=February 3, 2016|archive-url=https://web.archive.org/web/20170111083031/http://www.pcgamer.com/how-400-virtual-knives-saved-counter-strike/|archive-date=January 11, 2017|url-status=live|df=mdy-all}}
</ref> However, as ''Counter-Strike'' gained favor as an [[esport]], these skins became part of a larger [[skin gambling]] scheme, where grey market websites, integrated with Steam's features, could allow players to use skins to gamble on the results of ''Counter-Strike'' esport events, and later just using skins to play [[game of chance|games of chance]], sometimes skirting many gambling restrictions that virtual and real world casinos are subject to. While some of these websites were taken off line for various reasons, Valve was pressured to prevent abuse of the skin trading systems on Steam.<ref>{{cite web | url = https://www.bloomberg.com/features/2016-virtual-guns-counterstrike-gambling/ | title = Virtual Weapons are Turning Teen Gamers into Serious Gamblers | date = April 20, 2016 | access-date = July 18, 2016 | first1 = Joshua | last1 = Brustein | first2 = Eben | last2 = Novy-Williams | work = [[Bloomberg Business]] | archive-url = https://web.archive.org/web/20160720090610/http://www.bloomberg.com/features/2016-virtual-guns-counterstrike-gambling/ | archive-date = July 20, 2016 | url-status = live | df = mdy-all }}</ref>

Many games on Valve's video game marketplace [[Steam (service)|Steam]] would implement this form of trading in their games, monetizing it by taking a cut of sales revenue from these items, with Valve also doing the same.{{Citation needed|reason=It's true and I've seen this for myself but I don't have a proper source for it|date=April 2021}}

=== Player-driven economy ===
Some games may have currency systems that are partially or fully controlled by players of the game. Such games offer the means for players to acquire in-game resources which players may then sell or trade with other players, craft into gear which can be sell or traded, and otherwise create an virtual marketplace within the game above and beyond in-game stores established by the developer. This economy may also mix with real-world currency, with players trading in-game items through external websites to the game. ''[[EVE Online]]'' is a prime example of an online game with a vast player-driven economy that, in 2014, was estimated to have a total virtual value of {{USD|18 million}} based on the trading of the in-game currency.<ref>{{cite journal | title = Alienated Playbour: Relations of Production in EVE Online | first1 = Nicholas | last1 = Taylor | first2 = Kelly | last2 = Bergstrom2 | first3 = Jennifer | last3= Jenson | first4 = Suzanne | last4 =  de Castell | date = 2015 | journal = [[Games and Culture]] | volume = 10 | issue = 4 | pages = 365–388 | doi =  10.1177/1555412014565507 | citeseerx = 10.1.1.1002.469 | s2cid = 147523729 }}</ref><ref>{{cite web | url = https://www.ibtimes.co.uk/eve-online-meet-man-controlling-18-million-space-economy-1447437 | title = Eve Online: Meet the Man Controlling the $18 Million Space Economy | first = David | last = Gilbert | date = May 7, 2014 | access-date = February 15, 2020 | work = [[International Business Times]] | archive-date = February 15, 2020 | archive-url = https://web.archive.org/web/20200215192647/https://www.ibtimes.co.uk/eve-online-meet-man-controlling-18-million-space-economy-1447437 | url-status = live }}</ref> Player-driven economies have led to [[immaterial labor]] activities, such as [[gold farming]] in ''[[World of Warcraft]]'', where some players are paid in real-world funds to spend the time to acquire in-game wealth for other players.<ref>{{cite web | url = https://www.nytimes.com/2007/06/17/magazine/17lootfarmers-t.html | title = The Life of the Chinese Gold Farmer | first = Julian | last = Dibbell | date = June 17, 2007 | access-date = February 15, 2020 | work = [[The New York Times]] | archive-date = April 24, 2020 | archive-url = https://web.archive.org/web/20200424090453/https://www.nytimes.com/2007/06/17/magazine/17lootfarmers-t.html | url-status = live }}</ref> Websites such as [[Playerauctions]] and [[G2A]] operate as digital marketplaces for players to exchange items of value.<ref>{{Cite web |date=2008-11-11 |title=PlayerAuctions sets up exchange for digital assets in online games |url=https://venturebeat.com/games/playerauctions-sets-up-exchange-for-digital-assets-in-online-games/ |access-date=2023-01-03 |website=VentureBeat |language=en-US |archive-date=2023-01-03 |archive-url=https://web.archive.org/web/20230103010925/https://venturebeat.com/games/playerauctions-sets-up-exchange-for-digital-assets-in-online-games/ |url-status=live }}</ref><ref>{{Cite web |last=las 09:59 |first=byCarlos G. Gurpegui Publicado el 1 de agosto de 2018 a |date=2018-08-01 |title=El futuro de G2A es la inteligencia artificial |url=https://es.ign.com/g2a/137065/feature/el-futuro-de-g2a-es-la-inteligencia-artificial |access-date=2023-01-03 |website=IGN España |language=es-es |archive-date=2023-01-03 |archive-url=https://web.archive.org/web/20230103010926/https://es.ign.com/g2a/137065/feature/el-futuro-de-g2a-es-la-inteligencia-artificial |url-status=live }}</ref>

== Recent developments ==

=== More controlled markets ===

==== Price comparison ====
Information brokerages and other tools that aid in the valuation of virtual items on secondary markets have increased in number. This has occurred as a response to alleviate the labor involved in leveling that requires hours, days or weeks to achieve. Being able to exchange real money for virtual currency provides the player purchasing power for virtual commodities. As such, players are guaranteed opportunities, increased skills and a fine reputation, which is a definite advantage over others.

==== Taxation ====
Most scholars agree that the sale of virtual property for real currency or assets is taxable.<ref name="Camp 2007 1">{{cite journal|last=Camp|first=Bryan|title=The Play's the Thing: A Theory of Taxing Virtual Worlds|journal=Hastings Law Journal|year=2007|volume=59|page=1|doi=10.2139/ssrn.980693|s2cid=151189005|url=https://repository.uchastings.edu/cgi/viewcontent.cgi?article=3669&context=hastings_law_journal|hdl=10601/443|hdl-access=free}}</ref><ref name="Lederman 2007 1620">{{cite journal|last=Lederman|first=Leandra|title="Stranger Than Fiction": Taxing Virtual Worlds|journal=New York University Law Review|year=2007|volume=82|page=1620}}</ref><ref name="Masnick">{{cite news | url = http://www.techdirt.com/articles/20061017/163943.shtml | work = [[Techdirt]] | title = Nice Work Retrieving That Magic Sword…... But Now You Need To Pay Uncle Sam For It | first = Mike | last = Masnick | date = 18 October 2006 | access-date = 30 October 2007 | archive-date = 19 December 2007 | archive-url = https://web.archive.org/web/20071219054829/http://www.techdirt.com/articles/20061017/163943.shtml | url-status = live }}</ref> However, there are significant legal and practical challenges to the taxation of income from the sale of virtual property.<ref>{{cite web|last=Walpole|first=Michael|title=Taxing Virtual Profits|url=http://www.taxinstitute.com.au/files/contax/docs/feature_article_sept08.pdf|access-date=2013-05-02|archive-date=2015-09-24|archive-url=https://web.archive.org/web/20150924113349/http://www.taxinstitute.com.au/files/contax/docs/feature_article_sept08.pdf|url-status=dead}}</ref>  For example, uncertainty regarding the nature and conceptual location of virtual property makes it difficult to collect and apportion tax revenue when a sale occurs across multiple jurisdictions.<ref>{{cite journal|last=Druckman-Church|first=Michael|title=Taxing a Galaxy Far Far Away: How Virtual Property Challenges International Tax Systems|journal=Columbia Journal of Transnational Law|year=2013|volume=51|page=479}}</ref>

In addition to taxing income from transactions involving real currency or assets, there has been considerable discussion involving the taxation of transactions that take place entirely within a virtual economy.<ref name="Masnick"/><ref>{{cite web|last=Joint Economic Committee|title=Virtual Economies Need Clarification, Not More Taxes|url=http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=08e6fa84-ee4f-4267-9f47-ad0ad33a072d|access-date=2013-05-02|archive-date=2012-12-14|archive-url=https://web.archive.org/web/20121214012830/http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=08e6fa84-ee4f-4267-9f47-ad0ad33a072d|url-status=live}}</ref> Theoretically, virtual world transactions could be treated as a form of barter, thus generating taxable income.<ref name="Lederman 2007 1620"/> However, for policy reasons, many commentators support some form of a "cash out" rule that would prevent in-game transactions from generating tax liabilities.<ref name="Camp 2007 1"/> Nevertheless,  as one commentator notes, "the easier it is to buy real goods with virtual currency (e.g. order a real life pizza) the more likely the IRS will see exclusively in-world profits as taxable."<ref>{{cite web | url = http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/ | title = Two Experts Suggest Virtual World Profits May Be Taxable Even Before Conversion to Real World Cash | work = Virtually Blind | date = 23 October 2007 | first = Benjamin | last = Duranske | access-date = 30 October 2007 | archive-date = 26 October 2007 | archive-url = https://web.archive.org/web/20071026050806/http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/ | url-status = live }}</ref> The IRS had included in-game currency as taxable property in forms for calendar year 2019 reporting, but subsequently removed mention of them after complaints were filed about their inclusion.<ref>{{cite web | url = https://www.cnn.com/2020/02/13/tech/fortnite-taxes/index.html | title = IRS quietly deletes guideline that Fortnite virtual currency must be reported on tax returns | first = Brian | last = Fung | date = February 13, 2020 | access-date = February 14, 2020 | work = [[CNN]] | archive-date = February 14, 2020 | archive-url = https://web.archive.org/web/20200214002551/https://www.cnn.com/2020/02/13/tech/fortnite-taxes/index.html | url-status = live }}</ref>

==== Gambling regulation ====
As with the above skin gambling concerns, conversion between in-game and real-world currency has led to direct comparisons with other online ''games of chance'' as 'virtual winnings'. This is why gamers and companies engaged in this conversion, where it is permitted by a game, may fall under [[gambling legislation]].

During an interview with [[Virtual World News]], Alex Chapman of the British law firm [[Campbell Hooper]] stated: "Now we've spoken with the gambling commission, and they've said that MMOGs aren't the reason for the {{bracket|[[Gambling Act 2005]]}}, but they won't say outright, and we've asked directly, that they won't be covered. You can see how these would be ignored at first, but very soon they could be in trouble. It's a risk, but a very easy risk to avoid."<ref name="VWNews">{{cite web |url=http://www.virtualworldsnews.com/2007/07/follow-up-on-uk.html |archive-url=https://web.archive.org/web/20070804054103/http://www.virtualworldsnews.com/2007/07/follow-up-on-uk.html |url-status=dead |archive-date=4 August 2007 |work=Virtual Worlds News |title=UK Gambling Act: How to Protect Your Virtual World |date=11 July 2007 }}</ref> He suggested that compliance might require MMOGs and related traders to obtain a gambling license, which is not excessively difficult in the EU.

When queried about games where real-world transactions for in-game assets are ''not'' permitted, but there is an 'unofficial secondary market', Chapman responded: "Ultimately the point is whether the thing that you win has value in money or money's worth. If it does have value, it could be gambling."<ref name="VWNews"/> So to avoid regulation by these laws, the "operator would need to take reasonable steps to ensure that the rewards they give do not have a monetary value[,]"<ref name="VWNews"/> possibly by demonstrating enforcement of their [[terms of service]] prohibiting secondary markets.

=== Virtual crime ===
{{Main|Virtual crime}}

Monetary issues can give a virtual world problems similar to those in the real world. In [[South Korea]], where the number of video game players is massive, some{{who|date=June 2012}} have reported the emergence of gangs and mafia, where powerful players would threaten beginners to give money for their "protection", and actually steal and rob.{{Citation needed|date=May 2011}}

Other similar problems arise in other virtual economies. In the game ''[[The Sims Online]],'' a 17-year-old boy going by the in-game name "Evangeline" was discovered to have built a cyber-[[brothel]], where customers would pay sim-money for minutes of [[cybersex]]. [[Maxis]] canceled each of his accounts, but had he deposited his fortune in the Gaming Open Market he would have been able to keep a part of it.<ref>{{cite web | url = http://www.freep.com/news/mich/sims27_20040127.htm | archive-url = https://web.archive.org/web/20050716075604/http://www.freep.com/news/mich/sims27_20040127.htm | archive-date = 2005-07-16 | title = SEX AND THE SIMULATED CITY: Virtual world raises issues in the real one  | work = Detroit Free Press | date = 27 January 2004 | first = Jim | last = Schaefer}}</ref><ref>{{cite web | url = http://www.secondlifeherald.com/slh/2003/12/evangeline_inte.html | work = Alphaville Herald | title = Evangeline: Interview with a Child cyber-Prostitute in TSO | date = 8 December 2003 | access-date = 6 September 2009 | archive-date = 15 May 2008 | archive-url = https://web.archive.org/web/20080515195125/http://www.secondlifeherald.com/slh/2003/12/evangeline_inte.html | url-status = live }}</ref>

A 2007 virtual heist has led to calls from some community members in ''[[Second Life]]'' to bring in external regulation of these markets: "In late July, a perpetrator with privileged information cracked a stock exchange's computers, made false deposits, then ran off with what appears to be the equivalent of US$10,000, disappearing into thin air. This heist left investors feeling outraged and vulnerable."<ref>{{cite news | url = http://www.businessweek.com/stories/2007-08-10/virtual-exchanges-get-realbusinessweek-business-news-stock-market-and-financial-advice | title = Virtual exchanges get real | work = Businessweek | first = Francesca | last = Di Meglio | date = 10 August 2007 | access-date = 2013-07-18 | archive-date = 2013-08-05 | archive-url = https://web.archive.org/web/20130805065330/http://www.businessweek.com/stories/2007-08-10/virtual-exchanges-get-realbusinessweek-business-news-stock-market-and-financial-advice | url-status = dead }}</ref>

In ''[[EVE Online]]'' however, theft and scamming other players is perfectly allowed within the game's framework as long as no real world trading is committed.{{Citation needed|date=October 2021}} Players are allowed to loot all items from fallen victims in battle, but there is a disincentive in the form of [[Non-player character|NPC]] police intervention in higher-security space. Virtual possessions valued in the tens of thousands of [[United States dollar|USD]] have been destroyed or plundered through [[corporate espionage]] and [[piracy]]. This has resulted in widespread retributive warfare and crime between various player corporations.

==== Black market ====
Many MMORPGs such as ''[[RuneScape]]'', ''[[World of Warcraft]]'', ''[[Guild Wars]]'', ''[[Warhammer Online]]'', ''[[Lord of the Rings Online]]'' and ''[[Final Fantasy XI]]'' strictly prohibit buying gold, items, or any other product linked with the game, with real world cash. ''[[RuneScape]]'' went as far as making this practice impossible after being threatened by credit card companies when their customers who bought gold had their credit cards stolen to be used for bot accounts to farm even more gold by criminal traders.<ref>{{Cite web|url=http://services.runescape.com/m=rswiki/en/Q%26A:Wilderness_%26_Free_Trade_Answers|archive-url=https://web.archive.org/web/20120512122153/http://services.runescape.com/m=rswiki/en/Q%26A:Wilderness_%26_Free_Trade_Answers|archive-date=May 12, 2012|title=Support|url-status=dead}}</ref> They did this by removing unbalanced trades and their traditional player vs. player fighting system to prevent players from trading items by killing each other in combat for each other's items (this was scrapped on February 1, 2011, after having been in place for 3 years), resulting in over 60,000 cancelled subscriptions in protest.<ref>{{cite news | url = http://business.timesonline.co.uk/tol/business/industry_sectors/media/article3285256.ece | title = Online games group aims for growth the Nintendo way | work = [[The Times]] | first = Dan | last = Sabbagh | author-link = Dan Sabbagh | date = 1 February 2008 | access-date = 23 March 2010 | archive-date = 23 August 2011 | archive-url = https://web.archive.org/web/20110823150819/http://business.timesonline.co.uk/tol/business/industry_sectors/media/article3285256.ece | url-status = live }}</ref> ''[[Final Fantasy XI]]'' and ''[[Warhammer Online]]'' both have entire task forces dedicated to the removal of real money trading from the game. To control real money trading, ''[[EVE Online]]'' created an official and sanctioned method to convert real world cash to in-game currency; players can use real world money to buy a specific in-game item which can be redeemed for account subscription time or traded on the in-game market for in-game currency.

=== Stability ===
{{Main|Mudflation}}

For a persistent world to maintain a stable economy, a balance must be struck between currency sources and sinks. Generally, games possess numerous sources of new currency for players to earn.  However, some possess no effective "sinks", or methods of removing currency from circulation.  If other factors remain constant, greater currency supply weakens the buying power of a given amount; a process known as inflation.  In practice, this results in constantly rising prices for traded commodities.  With the proper balance of growth in player base, currency sources, and sinks, a virtual economy could remain stable indefinitely.

As in the real world, actions by players can destabilize the economy. [[Gold farming]] creates resources within the game more rapidly than usual, exacerbating inflation. In extreme cases, a [[cracker (software)|cracker]] may be able to exploit the system and create a large amount of money. This could result in [[hyperinflation]].

In the real world entire institutions are devoted to maintaining desired level of inflation. This difficult task is a serious issue for serious MMORPG's, that often have to cope with [[mudflation]]. Episodes of [[hyperinflation]] have also been observed.

==== Non-fungible token ====
A [[non-fungible token]] (NFT) is a unit of data on a digital [[ledger]] called a [[blockchain]], where each NFT can represent a unique digital item, and thus they are not [[Fungibility|interchangeable]]. NFTs can represent digital files such as art, audio, videos, items in video games and other forms of creative work. While the digital files themselves are infinitely reproducible, the NFTs representing them are tracked on their underlying blockchains and provide buyers with proof of [[ownership]]. Blockchains such as [[Ethereum]], WAXP, [[Bitcoin Cash]] and Flow each have their own token standards to define their use of NFTs.{{citation needed|date=March 2021}}

NFTs can also be used to represent in-game assets which are controlled by the user instead of the game developer. NFTs allow assets to be traded on third-party marketplaces where players of games such as [[Axie Infinity]] or [[MyCryptoHero]] can trade their tokenised "Axies" or "Heroes".<ref name="auto"/>

== Capital ==
In these virtual economies, the value of in-game resources is frequently tied to the in-game power they confer upon the owner. This power allows the user, usually, to acquire more rare and valuable items. In this regard, in-game resources are not just tradable objects but can play the role of ''[[Capital (economics)|capital]]''.

Players also acquire [[human capital]] as they become more powerful. Powerful guilds often recruit powerful players so that certain players can acquire better items which can only be acquired by the cooperation among many players.{{Citation needed|date=May 2015}}

== Other virtual economies ==
Virtual economies have also been said to exist in the "metagame" worlds of [[live action role-playing games]] and [[trading card game|collectible card games]].  Other "metagame" currencies have cropped up in games such as ''Everquest'' and ''World of Warcraft''.  [[Dragon kill points]] or DKP are a semi-formal score-keeping system used by [[Clan (computer gaming)#Clans in RPGs|guilds]] in [[massively multiplayer online game]]s.  Players in these games are faced with large scale challenges, or [[Raid (gaming)|raids]], which may only be surmounted through the concerted effort of dozens of players at a time.  Dragon kill points are not official currencies, but are created and managed by [[EverQuest#Social dynamics|endgame]] guilds to manage distributions of rewards in those raids.<ref>{{cite conference |last1=Castronova |first1=Ted |author-link1=Ted Castronova |last2=Fairfield |first2=Joshua |title=Dragon Kill Points: A Summary Whitepaper |conference=Rational Models Seminar |pages=1–10 |date=October 16, 2006 |location=[[University of Chicago]] |ssrn=958945 }}</ref><ref>{{cite book |last1=Gilbert |first1=Dan |last2=Whitehead |first2=James |last3=Whitehead |first3=James II |title=Hacking World of Warcraft |publisher=[[John Wiley & Sons]] |pages=[https://archive.org/details/hackingworldofwa00gilb/page/183 183, 184] |year=2007 |isbn=978-0-470-11002-7 |url=https://archive.org/details/hackingworldofwa00gilb/page/183 }}</ref>

Virtual economies represented not only in MMORPG genre but also in online [[business simulation game]]s (''[[Virtonomics]]'', ''[[Miniconomy]]''). Simplified economy represented in almost all [[real-time strategies]] (''[[StarCraft II: Heart of the Swarm]]'', ''[[Command & Conquer: Red Alert 2]]'') in a form of gathering and spending resources. ''[[Diablo III]]'' has its virtual economy as well which is represented by online game auction.

===Moderation on social news and networking sites===
On a number of discussion and networking sites, such as [[Slashdot]], [[Reddit]], [[care2]] and [[Yahoo! Answers]], points are gained through the [[trust metric|garnering of trust evidenced in upward moderations of posted content]]; however, as stated by Slashdot co-founder [[CmdrTaco]], his implementation of [[moderation system|user moderation]] was not intended as a currency, even though it has evolved on other discussion-oriented sites into such a system. On some such sites, the accumulation of "karma points" can be redeemed in various ways for virtual services or objects, while most other sites do not contain a redemption system.

On some sites, points are gained for inviting new users to the site.

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== Controversy {{anchor|Controversy: "Real" Economy Interaction}} ==
{{See also|Gold farming}}

A game's synthetic economy often results in interaction with a "real" economy; characters, currency, and items may be sold and bought on [[online auction]] websites or purchased from standalone webshops. Since January 2007 users are no longer allowed to sell virtual goods of online games on [[eBay]] due to the ambiguous legal status of real world trading.<ref>{{cite web | url = http://reviews.ebay.com/Buying-and-Selling-Virtual-Items-on-eBay?ugid=10000000004609906 | title = Buying and Selling Virtual Items on eBay : eBay Guides | publisher = norwood_trading_company | access-date = 19 Jan 2013}}</ref><ref>{{cite news | url = http://games.slashdot.org/story/07/01/26/2026257/ebay-delisting-all-auctions-for-virtual-property | title = eBay Delisting All Auctions for Virtual Property | date = 26 January 2007 | work = [[slashdot]] | access-date = 13 February 2013 | archive-date = 12 May 2013 | archive-url = https://web.archive.org/web/20130512210103/http://games.slashdot.org/story/07/01/26/2026257/ebay-delisting-all-auctions-for-virtual-property | url-status = live }}</ref>

While many game developers, such as [[Blizzard Entertainment|Blizzard]] (creator of ''[[World of Warcraft]]''), prohibit the practice, it is common that goods and services within virtual economies will be sold on [[online auction]] sites and traded for real currencies.<ref>{{cite web | url = https://www.nbcnews.com/id/wbna6870901 | title = Virtual worlds wind up in real courts - Technology & science - Games | date = 4 February 2005 | publisher = [[NBC News]] | access-date = 7 February 2005 | archive-date = 24 September 2020 | archive-url = https://web.archive.org/web/20200924003902/http://www.nbcnews.com/id/6870901 | url-status = live }}</ref>

According to standard conceptions of economic value (see the [[economic subjectivism|subjective theory of value]]), the goods and services of virtual economies do have a demonstrable value. Since players of these games are willing to substitute real economic resources of time and money (monthly fees) in exchange for these resources, by definition they have demonstrated [[utility]] to the user. Some virtual currencies have even accrued higher value and stability than some real world currencies. One example is Runescape's gold coins, which is more valuable and stable alternative to the Venezuelan Bolívar, with many Venezuelan's turning to selling Runescape gold to make a living.<ref>{{Cite web|last=Ombler|first=Mat|date=2020-05-27|title=How RuneScape is helping Venezuelans survive|url=https://www.polygon.com/features/2020/5/27/21265613/runescape-is-helping-venezuelans-survive|access-date=2021-04-19|website=Polygon|language=en|archive-date=2020-10-24|archive-url=https://web.archive.org/web/20201024070352/https://www.polygon.com/features/2020/5/27/21265613/runescape-is-helping-venezuelans-survive|url-status=live}}</ref>

In January 2010, Blizzard stepped up its offensive on account security scams with the launch of a new website. The new Battle.Net account security website hopes to highlight the importance of keeping it safe when it comes to subscribers' accounts.<ref>{{cite web | url = http://us.battle.net/security/ | title = Battle.net Account Security | publisher = [[Blizzard Entertainment]] | access-date = 28 February 2010 | archive-date = 4 March 2010 | archive-url = https://web.archive.org/web/20100304133530/http://us.battle.net/security/ | url-status = live }}</ref>

<blockquote>
    These pages are part of a larger effort to provide you with the knowledge and tools necessary to identify and report threats to your account's safety, to spotlight ways in which we work to fulfill our security commitment, and to act as a helpful resource in case someone manages to steal account information from you.
</blockquote>

Ongoing campaign by WoW fan sites to boycott gold ads on their sites is just one of several community efforts to raise awareness against crackers.<ref>{{cite web | url = http://agencynews.net/2010/01/31/protect-your-account/ | title = Protect Your Account | work = Agency News | date = 31 January 2010 | access-date = 28 February 2010 }}{{dead link|date=January 2018 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

<blockquote>
    Gold sellers and leveling services are responsible for the vast majority of all account thefts, and they are the number-one source of World of Warcraft-related phishing attempts, spyware, and even credit card theft. Players who buy gold actively support spam, hacks, and keyloggers, and by doing so diminish the gameplay experience for everyone else.
</blockquote>

On August 1, 2011, Blizzard Entertainment announced that their forthcoming MMORPG, [[Diablo III]], will include a currency-based auction house, wherein players will be able to buy and sell in-game items for real money.<ref>{{cite web | url = http://us.battle.net/d3/en/services/auction-house/info#q16 | title = Diablo 3 Auction House: General FAQ | work = Blizzard Entertainment, Inc | date = 1 August 2011 | access-date = 26 January 2012 | archive-date = 7 January 2012 | archive-url = https://web.archive.org/web/20120107005815/http://us.battle.net/d3/en/services/auction-house/info#q16 | url-status = live }}</ref> Robert Bridenbecker, Vice President of Online Technologies at Blizzard, explained that the intent behind the effort is largely to reduce account thefts resulting from player interaction with third-party sites. An undisclosed fee structure including listing fees, sale fees, and cash-out fees will accompany the Auction House at launch, and all transactions will exist within the protected context of Blizzard's MMORPG.  The "Real Money Auction House" (RMAH), as it is called by the ''[[Diablo III]]'' fanbase, will exist in the presence of a parallel auction house wherein items are exchanged for gold, the in-game currency.  Accordingly, gold can be posted on the RMAH such that the two currencies may be exchanged for one another at the market rate less applicable fees.

Other virtual world developers officially sell virtual items and currency for real-world money.  For example, the [[MMOG]] ''[[There (internet service)|There]]'' has [[therebucks]] that sell for US dollars.  If the currency in ''[[Second Life]]'', the Linden Dollars, can be easily acquired with real money, the reverse is done through a market place owned by Linden Lab, but is not guaranteed, as the TOS of linden Lab explicitly says that Linden dollars are not redeemable.  Rates would fluctuate based on supply and demand, but over the last few years they have remained fairly stable at around 265 Linden Dollars (L$) to the US Dollar, due to "[[money creation]]" by Linden Lab. The currency in ''[[Entropia Universe]]'', Project Entropia Dollars (PED), could be bought and redeemed for real-world money at a rate of 10 PED for [[USD|U.S$.]] 1.  On December 14, 2004, an island in ''Project Entropia'' sold for U.S. $26,500 (£13,700).  One gamer also purchased a virtual [[space station]] for U.S. $100,000 (£56,200) and plans to use it as a virtual [[nightclub]].<ref>{{cite news | url = http://news.bbc.co.uk/1/hi/technology/4385048.stm | work = [[BBC News (TV channel)|BBC News]] | title = Virtual club to rock pop culture | date = 2 November 2005 | access-date = 2 November 2005 | archive-date = 7 November 2005 | archive-url = https://web.archive.org/web/20051107074152/http://news.bbc.co.uk/1/hi/technology/4385048.stm | url-status = live }}</ref><ref>{{cite news | url = http://news.bbc.co.uk/1/hi/sci/tech/4421496.stm | work = [[BBC News (TV channel)|BBC News]] | title = Virtual property market booming | date = 9 November 2005 | access-date = 9 November 2005 | archive-date = 24 November 2005 | archive-url = https://web.archive.org/web/20051124154954/http://news.bbc.co.uk/1/hi/sci/tech/4421496.stm | url-status = live }}</ref> Another example was recently cited on [https://www.cnbc.com/2016/08/10/want-a-full-pokemon-go-account-its-yours-for-999999.html CNBC]<ref>{{Cite web|url=https://www.cnbc.com/2016/08/10/want-a-full-pokemon-go-account-its-yours-for-999999.html|title=Want a full 'Pokemon Go' account? It's yours for $999,999|last=Kharpal|first=Arjun|date=2016-08-10|website=CNBC|access-date=2016-08-25|archive-date=2016-08-21|archive-url=https://web.archive.org/web/20160821134137/http://www.cnbc.com/2016/08/10/want-a-full-pokemon-go-account-its-yours-for-999999.html|url-status=live}}</ref> that one seller was selling a Pokémon Go account for $999,999.

Many Korean virtual worlds (such as [[Flyff]]) and other worlds outside that country (such as [[Archlord]] and [[Achaea, Dreams of Divine Lands]]) operate entirely by selling items to players for real money.  Such items generally cannot be transferred and are often used only as a means to represent a Premium subscription via a method which is easily integrated into the game engine.

These intersections with real economies remain controversial. Markets that capitalize in gaming are not widely accepted by the gaming industry. Reasons for this controversy are varied.  Firstly, the developers of the games often consider themselves as trying to present a fantasy experience, so the involvement of real world transactions takes away from it.  Further, in most games, it would be unacceptable to offer another player real currency in order to have them play a certain way (e.g., in a game of ''[[Monopoly (game)|Monopoly]]'' between friends, offering another player a real dollar in exchange for a property on the board); and for this to be necessary or valuable may indicate a [[Kingmaker scenario]] within the game.  However, such rules of etiquette need not apply, and in practice they often don't, to massive game worlds with thousands of players who know one another only through the game system.

Further and more involved issues revolve around the issue of how (or if) real-money trading subjects the virtual economy to laws relating to the real economy.  Some argue that to allow in-game items to have monetary values makes these games, essentially, gambling venues, which would be subject to legal regulation as such.  Another issue is the impact of taxation that may apply if in-game items are seen as having real value.  If (for example) a magic sword is considered to have real-world value, a player who kills a powerful monster to earn such a sword could find himself being charged tax on the value of the sword, as would be normal for a "prize winning".  This would make it impossible for any player of the game ''not'' to participate in real-money trading.

A third issue is the involvement of the world's developer or maintenance staff in such transactions.  Since a developer may change the virtual world any time, ban a player, delete items, or even simply take the world down never to return, the issue of their responsibility in the case where real money investments are lost through items being lost or becoming inaccessible is significant.  Richard Bartle argued that this aspect negates the whole idea of ownership in virtual worlds,<ref>{{cite web | url = http://www.themis-group.com/uploads/Pitfalls%20of%20Virtual%20Property.pdf | title = Pitfalls of Virtual Property | first = Richard A. | last = Bartle | year = 2004 | publisher = The Themis Group | url-status = dead | archive-url = https://web.archive.org/web/20070117062557/http://www.themis-group.com/uploads/Pitfalls%20of%20Virtual%20Property.pdf | archive-date = 2007-01-17 }}</ref> and thus in the absence of real ownership no real trade may occur.  Some developers have acted deliberately to delete items that have been traded for money, as in [[Final Fantasy XI]], where a task force was set up to delete characters involved in selling in-game currency for real-world money.<ref>{{cite web | url = http://www.playonline.com/pcd/topics/ff11us/detail/1013/detail.html | work = FINAL FANTASY XI Official Web Site | title = Special Task Force | date = 6 November 2006 | access-date = 13 February 2008 | archive-date = 10 March 2008 | archive-url = https://web.archive.org/web/20080310031017/http://www.playonline.com/pcd/topics/ff11us/detail/1013/detail.html | url-status = live }}</ref>

[[File:LindeX Market Data.png|thumb|LindeX Market Data]]

However, [[Second Life]] has shown a legal example which may indicate that the developer can be in part held responsible for such losses. Second Life at one stage, offered and advertised the ability to "own virtual land", which was purchased for real money.  In 2007, Marc Bragg, an attorney, was banned from [[Second Life]]; in response he sued the developers for thereby depriving him of his land, which he – based on the developers' own statements – "owned".  The lawsuit ended with a settlement in which Bragg was re-admitted to Second Life.  The details of the final settlement were not released, but the word "own" was removed from all advertising as a result. (Bragg purchased his land directly from the developers, and thus they were not an uninvolved third party in his transactions.) {{citation needed|date=January 2015}}

{{clear}}

== See also ==
{{div col|colwidth=20em}}
* [[Cryptocurrency]]
* [[Digital currency]]
* [[Electronic money]]
* [[Simulated reality]]
* [[Social simulation]]
* [[Virtual reality]]
* [[Virtual world]]
* [[Virtual currency]]
{{div col end}}

== References ==
{{Reflist|2}}

== External links ==
* [https://web.archive.org/web/20070114015621/http://virtual-economy.org/bibliography Virtual Economy Research Network bibliography] – a comprehensive bibliography of publications related to virtual economy
* [[Edward Castronova|Castronova, Edward]]. "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier," [https://ssrn.com/abstract=294828 ''CESifo Working Paper No. 618''], December 2001.
* Castronova, Edward. "On Virtual Economies," [https://ssrn.com/abstract=338500 ''CESifo Working Paper Series No. 752''], July 2002.
* Castronova, Edward. "The Price of  'Man'  and 'Woman': A Hedonic Pricing Model of Avatar Attributes in a Synthethic World," [https://ssrn.com/abstract=415043 ''CESifo Working Paper Series No. 957''], June 2003.
* [[Richard Bartle|Dr. Richard A. Bartle]], [https://web.archive.org/web/20070117062557/http://www.themis-group.com/uploads/Pitfalls%20of%20Virtual%20Property.pdf Pitfalls of Virtual Property] – A philosophical case against the concept of "virtual property" ownership.
* [http://www.economist.com/displaystory.cfm?story_id=S%27%29%288%2BQ%21%5F%2B%23%40%22%5C%0A&tranMode=none Virtual Economies] {{Webarchive|url=https://web.archive.org/web/20080503091640/http://www.economist.com/displaystory.cfm?story_id=S%27%29%288%2BQ%21%5F%2B%23%40%22%5C%0A&tranMode=none |date=2008-05-03 }} The Economist, Jan 2005, (subscription)
* Zonk (Slashdot). [http://games.slashdot.org/article.pl?sid=04/12/14/1759253 "Virtual Island Sells For $26,500"]. 14 December 2004.
* [https://ssrn.com/abstract=807966 Fairfield, Joshua, "Virtual Property"]. Boston University Law Review, Vol. 85, 2005
* [https://ssrn.com/abstract=987056 Internet Gambling Regulation Present and Future] – Mark Methenitis' Essay for [[Texas Tech University School of Law]] detailing internet gambling and economies within MMORPG's and the problems that will be faced in the future.
* [http://www.raphkoster.com/gaming/lewisagc2006.ppt Economic Theory and MMOGs] – Powerpoint presentation by Sam Lewis, a designer working with [[Sony Online Entertainment|SOE]], on the interaction between economic theory and MMO design.
* [https://techcrunch.com/2007/06/20/virtual-goods-the-next-big-business-model/ Virtual Goods: the next big business model]  by Susan Wu
* {{cite book |last      = Lastowka
 |first     = Greg
 |year      = 2010
 |title     = Virtual Justice
 |publisher = Yale University Press
 |isbn      = 978-0-300-14120-7
 |url       = https://archive.org/details/virtualjusticene00
 }}
* Lastowka, Greg and Hunter, Dan. "The Laws of the Virtual Worlds," [https://ssrn.com/abstract=402860 California Law Review]
* Yoon, Ung-Gi. "Real Money Trading in MMORPG items from a Legal and Policy Perspective", [https://ssrn.com/abstract=1113327 South Korean Judge's thought on RMT in virtual world]
* [http://mises.org/daily/6435/A-Virtual-Weimar-Hyperinflation-in-a-Video-Game-World A Virtual Weimar: Hyperinflation in a Video Game World]

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